My Stocks For A New Era

When one admits that nothing is certain one must, I think, also admit that some things are much more nearly certain than others. ~ Bertrand Russell

Recently, there there seems to have been a shift in confidence among financial experts in their projections.

There doesn't seem to be as much air of certainty for their recommendations and predictions. In his last presentation, the head of my financial advisor team commented on this phenomenon and how these were people that were usually certain about their projections. My father-in-law made a similar comment about his view of the global economic picture. While he as been able to anticipate key trends of the past twenty years, the direction of the future isn't as clear.

That's probably because we are in the midst of a shift to a new era, not unlike the transition from an agricultural to an industrial economy in the early 1900s. However, it it isn't clear where we're going from industrial. Some possibilities are information, service or financial.

I believe that the shift will be towards an information era, with particular focus on the scale of knowledge transfer. Just as the industrial transition was about the systematization and scaling of knowledge into making products, the information era will be about the systematization and scaling of knowledge into product manufacturing and services.

To me, a potential winner in the future information era is Amazon.com. While some see Amazon.com (AMZN) primarily as a retailer, I think of them as an expert supply chain and back office operations company. Instead of keeping the expertise proprietary, Amazon.com is selling the knowledge to small companies in the form of supply chain and back office services, at a cost lower than a small company could achieve themselves. If Amazon.com could provide these services for a large number of small companies, the revenue stream would be tremendous.

Another potential winner is Google (GOOG), whose mission is "to organize the world's information and make it universally accessible and useful." While Google is the leader in search, the area that may be potentially big (and still to be proven) is their work on cloud computing.

In both cases, these companies are willing to sell core expertise to other companies that can benefit from the knowledge and competencies, which will eventually drive down costs significantly and improve productivity. As a result, I believe Google and Amazon will be two of the major winners in the future economic era.

Disclosure: At the time of publication, I owned shares of Google and Amazon as part of my core long term holdings.

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